Given the rapid advances in both theory and practice, the second edition of Pilbeam’s International Finance is to be welcomed. The core of this book, parts one and two, is a clear exposition of international finance theory encompassing the central themes in international finance and/or economics. Namely, balance of payments theory; open economy macroeconomics; the monetary approach to the balance of payments; approaches to purchasing power parity and portfolio balance models. The penultimate chapter of part two (chapter 9) is kept up to date and includes a fuller discussion, particularly as regards modelling exchange rate expectations and alternative ways to modelling exchange rates. In all cases, the areas are given a comprehensive treatment, underscored by lucid exposition and clear diagrammatic illustration, albeit with a minimum level of mathematical explanation.
The final part of Pilbeam’s International Finance, part three, covers the post‐war international monetary system. Overall, this section provides a clear and lucid explanation of exchange rate systems, from the Bretton Woods era to the present. Most of the material in this section is very much the same, except for the sections on the currency turmoil of the 1990s, which is a very valuable feature of the chapter. Extensive revision has been made to tighten up the discussion and focus of chapter 12 and to bring the contents more fully up to date. In this section there is excellent coverage of the Eurodollar market, with useful sections on the pros and cons of the market and issues of growing concern, such as the control and regulation of the Eurobond market.
A key feature of this edition is the new chapter on currency derivatives. Here we find discussions, albeit brief treatments, on futures, options and swaps, with examples on how these instruments might be used for both speculative gains and hedging purposes. The coverage of these topics is by no means exhaustive, and Pilbeam is to be congratulated on making this material accessible in a clear and largely nontechnical way.
The final three chapters offer a more rounded and extensive coverage of international policy coordination (chapter 14), international debt (chapter 15) and issues specific to the European monetary system and European monetary union (chapter 16). These issues are discussed in an informed and exemplary manner, with adequate coverage of key developments since the first edition.
As can be seen from this description of the book, it is comprehensive in its content. Furthermore, Pilbeam’s presentation is, overall, quite excellent and the book makes for an easy read. This makes it readily accessible as a first introduction to a specialised senior undergraduate level course on international economics/finance or related courses, as well as for a first course in international finance at the graduate level. It is this market that Keith Pilbeam is seeking to lock in to with his second edition, and should continue to achieve success.
